Internet & technology

VoIP telephony will be legalised first in West Africa, says new report

2004-08-05, Issue 168

http://pambazuka.org/en/category/internet/23674

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VoIP telephony has been largely illegal in Africa but a new breed of telecoms regulators will open up its use and this is most likely to happen in West Africa, according to the authors of a new report published by Balancing Act this month (http://www.balancingact-africa.com) For the first time ever, this report looks in detail at the state of the Internet in 22 West African countries.









4th August 2004

VoIP telephony will be legalised first in West Africa, says new report

VoIP* telephony has been largely illegal in Africa but a new breed of telecoms regulators will open up its use and this is most likely to happen in West Africa, according to the authors of a new report published by Balancing Act this month (http://www.balancingact-africa.com) For the first time ever, this report looks in detail at the state of the Internet in 22 West African countries.

When Mauritius launched a number of legal, international VoIP calling services at the beginning of 2004 it became the first African country to take this major step. Although Mauritius is very different from every other African country, its first move into VoIP is the opening round in the steady legalisation of VoIP services throughout the continent. The question is no longer if it will happen but when will it happen?

West Africa has particularly large VoIP grey markets and the incumbent telephone companies in two of the larger markets have put numbers on its size. Rein Zwolsman, CEO of Nigeria’s Nitel estimated that before he put in place cuts in international calling rates, that a staggering 90 per cent of international calls were in the grey market. Oystein Bjorge, CEO of Ghana Telecom put the value of the grey market in Ghana at somewhere between US$15-25 million a year in 2003:”(These are) ball park figures. It depends on the rates you apply and the volumes”. In other countries, the grey market is estimated at somewhere between 10-20% of the overall market.

According to one of the report’s author’s Russell Southwood:”Grey markets in international VoIP calling have grown up almost everywhere in Africa because of the large difference between the price charged to the African customer by monopoly incumbent telephone companies and the much cheaper cost at which they buy that call on the international market. Grey market operators like ISPs and cyber-cafes can offer the calls more cheaply and still make a profit.”

The legalisation of VoIP will change the structure of both the internet and telecoms industries and the report looks at how this might occur and the type of new operators that will emerge, offering VoIP calling both domestically and internationally.

Liberalisation has already come to seven out of the 22 countries in West Africa covered in the report and the majority will follow in the next three years. Without the need to protect the incumbent telephone company, VoIP can be seen as a technology for gaining competitive advantage in liberalised national and international markets.

The authors of the report conclude that it is more likely to be legalised quickly in West Africa for a number of reasons. Several of the incumbent telcos have already made “under-the-counter” deals to allow companies to operate. For example, Mali’s Sotelma has made VoIP agreements with four local companies. The agreements make the four companies in effect retail VOIP sellers, using Sotelma for their bandwidth at an agreed rate.

The CEO of the leading regulator in the region – the Nigerian Communications Commission’s Ernest Ndukwe – has already adopted a progressive stance on the issue. He has said clearly that it is not about trying to make a technology illegal as regulation should be “technology-neutral”. If people want to offer services (VoIP or otherwise) then they must obtain a licence. And if you want to offer international VoIP calling then you have to connect to the backbone of Nitel or the SNO, Globacom.

For these reasons, it seems that VoIP will be legalised first on the mainland of the African continent in West Africa and when it is, both the internet and telecom industries will change considerably in the wake of it happening.

ENDS

Note to the Editor

*Shorthand definition of VoIP

Voice over Internet Protocol (VoIP) is a generic term which refers to a technical standard that enables the transmission of voice traffic in whole or in part, over one or more network, which uses the Internet Protocol. VoIP traffic can be carried on a privately managed or the public Internet or a combination of both. VoIP technology supports a wide range of applications from traditional telephone services to interactive games. (Source: OFCOM)

The Report

Balancing Act’s African Internet Country Market Profiles is published in four parts. Part 1: West Africa has just been published and covers 22 countries. Part 2: East Africa will be published in early 2005. Part 3: Southern and Central Africa will be published in mid-2005. Part 4: North Africa will be published at the end of 2005. For further details: http://www.balancingact-africa.com

Each report covers the following: Overview of internet in West Africa, Impact of VoIP legalisation, key statistics, country background data, number of ISPs, dial-up-subs, bandwidth and backbone, geographic coverage, cyber-cafes, local web content, current status of regulation, digital divide initiatives and landline and mobile data.

Balancing Act is an online publishing and consultancy business covering telecoms, internet and computing in Africa. It is one of the primary sources of information and expertise in this area. It publishes Balancing Act’s News Update, a weekly e-letter which goes out to 7,200 subscribers across the continent and a monthly French-language edition.

The authors

Paul Hamilton, an independent consultant specialising in African telecommunication markets, is an associate of Balancing Act. Formerly the Telecoms Research Manager at World Markets Research Centre (WMRC), he has undertaken a range of research, analysis and consulting assignments for operators, vendors, NGOs and regulators.

Mike Jensen is a South African independent consultant with experience in over 35 countries in Africa assisting in the establishment of information and communications systems over the last 15 years. He provides advice to international development agencies, the private sector, NGOs and governments in the formulation, management and evaluation of their Internet projects.

Russell Southwood is the Chief Executive of Balancing Act and the Editor of its weekly e-letter on telecoms, internet and computing News Update. As a consultant, he has worked for a variety of clients looking at: the demand for fibre infrastructure in Africa over the next five years; the creation of a regional internet exchange point; the future for VoIP services in Africa ; the development of local internet content and services; and policy development.



Balancing Act

+ 44 (207) 720 3134

editorial@balancingact-africa.com

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